Just saying no: adviser turns away first freedom request

Just saying no: adviser turns away first freedom request

In an example of what may be to come as pension freedom requests begin to flood in, one adviser has already had his first experience of turning away a client who was seeking to cash in a pension despite advice not to do so.

The adviser wrote in a letter to the client that the threat of future claims in such cases had created a ‘Catch 22’ situation. He directly cited Personal Finance Society chief executive Keith Richards’ advice to ‘just say no’ to insistent clients.

The client, described by the adviser as a previous “transactional customers”, had sent an email at shortly after 7am on Easter Monday, the first day of the new pension freedoms, stating he wanted to withdraw his £62,000 pension over the next two or three years.

Article continues after advert

Money is generally being withdrawn in an effort to move it outside of the pension environment - a potentially common theme among a baby boomer generation which has lived through more than one major pension scandal - and in phases to avoid a major tax hit.

The adviser reckoned the client, in his 60’s, should be in an annuity or drawdown plan to provide some form of secure income for himself and his wife. He warned the client about the tax implications of withdrawing the funds.

Last week, the PFS wrote to the government and Financial Conduct Authority warning they run the risk of creating a future mis-selling scandal that will bring future claims on advisers if they do not address the issue of ‘insistent clients’ acting against professional advice.

In a letter to his client, seen by FTAdviser, the adviser said that “as an industry, we have been advised to distance ourselves from actions taken by consumers contrary to our advice”.

As a result, the adviser added that he will only be able to point him in the direction of the government’s guidance service Pension Wise.

The adviser also told the client that he could approach his current provider to see if they will facilitate any legal and specific request without the involvement of an adviser.

“I will be interested to hear from you what their response is, as the government believe people should be able to act contrary to advice,” he wrote.

“The problem is if we are then blamed for people’s actions under the circumstances we find ourselves in a Catch 22 situation as a business. Some providers are also indicating they will not act without the involvement of an adviser.”

He acknowledged to his client that the email is “the first” of what is likely to be many people caught between government and professional bodies on the issue of ‘pension freedoms.

Had clients seeking to take cash or otherwise act against advice? Get in touch via the email address below or leave a comment.